EQ Economics managing director Warren Hogan is amongst those<\/a> and said inflation\u2019s jump to 3.8 per cent showed the economy was at capacity.<\/p>\n\u201cAs we saw last week, (we\u2019re) creating inflation that is now not only running above the RBA’s target, but looks to be picking up and moving away from it,\u201d he told Business Now.<\/p>\n
\u201cThis is the disaster scenario for the RBA, who had hoped for this narrow path and I think last week we got evidence that the narrow path was not the right strategy.\u201d<\/p>\n
Former RBA governor Philip Lowe in June 2023, when the central bank was in the midst of a series of rate hikes, laid out his plan for the \u201cnarrow path\u201d.<\/p>\n
\u201cThat path is one where inflation returns to target within a reasonable timeframe, while the economy continues to grow and we hold on to as many of the gains in the labour market as we can,\u201d Mr Lowe told attendees at the Morgan Stanley 5th Australia Summit.<\/p>\n
\u201cIt is still possible to navigate this path and our ambition is to do so, but it is a narrow path and likely to be a bumpy one with risks on both sides.\u201d<\/p>\n
The RBA did not hike interest rates as early or as aggressively as other nations dealing with surging post-pandemic inflation.<\/p>\n
It subsequently took longer for Australia to get inflation back into the two to three per cent target band than other nations, although the nation’s unemployment rate stayed low throughout this time.<\/p>\n
Mr Hogan\u2019s criticism of the narrow path comes ahead of GDP figures due to be released by the Australian Bureau of Statistics on Wednesday.<\/p>\n
The economist said the Australian economy was \u201cat capacity\u201d due to lacklustre productivity and any rise in GDP could be inflationary.<\/p>\n
\u201cWhether it’s the government trying to hire workers or private enterprise trying to get construction happening\u2026 there is competition which is putting upward pressure on prices,\u201d Mr Hogan said.<\/p>\n
\u201cThis is happening because we have little productivity in our economy and that productivity needs to be based on private sector investment.\u201d<\/p>\n
GDP rose 1.8 per cent over the 12 months to June 2025 and lifted 0.6 per cent in that quarter.<\/p>\n","protected":false},"excerpt":{"rendered":"The Reserve Bank of Australia\u2019s \u201cnarrow path\u201d approach to taming inflation while minimising damage throughout the economy was…\n","protected":false},"author":2,"featured_media":321193,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,14821,164,5465,5626,7054,183,90107],"class_list":["post-321192","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-cash-rate","tag-economy","tag-inflation","tag-interest-rates","tag-rba","tag-reserve-bank-of-australia","tag-warren-hogan"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/321192","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=321192"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/321192\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/321193"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=321192"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=321192"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=321192"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}